Before You Hire a Temporary Employee

Seasonal and temporary workers have always been common in industries such as manufacturing, construction, landscaping and retail. However, since the recession, more employers—including those who traditionally employed permanent professionals—have turned to temps and contract workers to satisfy their staffing needs. In fact, by 2020, more than 40% of the US workforce will be free-lancing, according to a recent study  conducted by software company Intuit. That’s more than 60 million people.

Temporary and seasonal workers are certainly cost effective. Hiring temps is often cheaper than hiring permanent employees with benefits—especially if you expect to use their services for six months or less. If you choose to work with a temp agency, you are relieved of much of the burden associated with maintaining an employee, from recruiting and hiring to payroll expenses and benefit paperwork. However, you must still abide by the laws and regulations that govern the use of seasonal and temporary workers.

Discrimination and Disability – Equal employment opportunity laws, such as Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act, apply to temporary and seasonal employees, whether you’ve hired them yourself or through an agency. These professionals receive the same protection against discrimination, harassment and retaliation as do permanent employees.

Unionization, Wages and Safety – Additionally, the provisions of the National Labor Relations Act, the Fair Labor Standards Act and the Occupational Safety and Health Act also apply to temporary and seasonal employees. You may not prohibit your temps from joining a union. You must pay them at least the minimum wage required by law. And you must provide them with a safe workplace.

Unemployment – Laws vary by state, so consult your state department of labor or your legal advisor to determine your responsibilities. Certain “seasonal employers” may be exempt from unemployment benefit obligations.

Social Security and Medicare – Unless you are using a temporary or seasonal worker acquired through an agency (and they are handling the payroll for that worker), you must withhold Social Security and Medicare taxes from the worker’s wages and pay the required matching amount yourself.

State and Federal Taxes – Again, unless a staffing agency is handling payroll for your seasonal and temporary workers, you must withhold appropriate state and federal income taxes from their pay.

Workers’ Compensation – The law requires all businesses with employees—temporary or otherwise—to carry worker’s compensation insurance. This insurance covers the medical and rehabilitation costs—plus some lost wages—of your workers should they become injured on the job. If you’ve hired your temporary or seasonal workers through a staffing firm, the contract should specify who pays for workers’ compensation insurance. If you are responsible for this and fail to do so, an injured temporary worker could sue your company for negligence.

Whether you regularly rely on temporary and seasonal workers or are thinking about adding to your staff with this type of employee in the future, consult your insurance representative about your state’s workers’ compensation insurance requirements and other legal considerations.